Agenda Item No
The Vale of Glamorgan Council
Audit Committee: 16th November 2015
Report of the Operational Manager - Audit as the Head of Audit
Audit Committee - The Public Sector Internal Audit Standards - Proposals for undertaking an External Assessment.
Purpose of the Report
1. This report outlines the benefits of, and seeks Audit Committee agreement to the proposed arrangements for carrying out the external review of the Council's Internal Audit Shared Service function, as required by the Public Sector Internal Audit Standards (PSIAS).
- THAT Members have regard to the options as set out in Appendix A and identify their preferred choice to ensure that compliance with the Public Sector Internal Audit Standards is achieved.
- THAT a further report is presented to Members in due course; setting out the proposed scope and objectives of the assessment in accordance with their preferred choice. This should ensure that the Committee can gain the necessary external assurances on the effectiveness of the Internal Audit Shared Service function.
Reason for the Recommendations
(1&2) To keep the Audit Committee informed and to ensure compliance with the Public Sector Internal Audit Standards (PSIAS).
2 The Public Sector Internal Audit Standards introduced a requirement for an external assessment which must be conducted at least once every five years by a qualified, independent reviewer from outside the organisation. The relevant standard states:
3 "Standard 1312 - External Assessments - External assessments must be conducted at least once every five years by a qualified, independent assessor or assessment team from outside the organisation. The Chief Audit Executive (Head of Internal Audit) must discuss with the board (Audit Committee); the form of external assessments; the qualifications and independence of the external assessor or assessment team, including any potential conflict of interest."
4 The purpose of the external assessment is to help improve delivery of the audit service to an organisation. The assessment should be a supportive process that identifies opportunities for development which ultimately helps to enhance the value of the audit function.
Relevant Issues and Options
5. The two possible approaches to external assessment outlined in the standard include either a full external assessment or an internal self-assessment which is validated by an external reviewer. Therefore, the options available are as follows:-
Peer reviews to be carried out by the Heads of Internal Audit across Wales;
Buying-in the function from a professional body, e.g. The Institute of Internal Auditors;
Buying-in the service from another suitably qualified and experienced individual / firm;
6. Attached at Appendix A is a summary of the options outlining the advantages and disadvantages associated with each option (this list is not exhaustive) and a rough estimate of the likely cost.
7. It is clear from the summary that the most cost effective option is the peer review; however, if this is the preferred option then Members should have regard to the fact that all Welsh Internal Audit services have some knowledge of each other and this could have an impact on objectivity and /or independence.
Resource Implications (Financial and Employment)
8. The costs involved will be borne within the existing Internal Audit Shared Service budget.
Sustainability and Climate Change Implications
9. None directly from this report
Legal Implications (to Include Human Rights Implications)
10. Provision of an adequate and effective Internal Audit function is a legal requirement under the Accounts and Audit (Wales) Regulations 2005 as amended. The PSIAS replaced the Code of Practice for Internal Audit in Local Government in the United Kingdom, last revised in 2006. In local government in Wales, the PSIAS is mandatory for all principal local authorities and other relevant bodies subject to the Accounts and Audit (Wales) (Amended) Regulations 2010.
Crime and Disorder Implications
11. Pursuing initiatives to prevent, detect and deter crime is encompassed within the terms of reference under which the audit function operates.
Equal Opportunities Implications (to include Welsh Language issues)
12. None as a direct consequence of this report.
13. The work of audit is intended to assist in the achievement of all corporate and service objectives.
Policy Framework and Budget
14. The proposals in this report are in accordance with the policy framework and budget.
Consultation (including Ward Member Consultation)
15. No further consultation is proposed.
Relevant Scrutiny Committee
16. Corporate Resources.
Helen Smith - Operational Manager - Audit Tel: 01656 754901
External Auditor - Wales Audit Office
Carys Lord - Head of Finance/Section 151 Officer